Family Law
December 21, 2022

When parties have separated and are working towards a property settlement, courts and lawyers often adopt what is referred to as the ‘Four Step Approach’. There is no scientific formula in order to reach a certain percentage, and each case will have its own particular set of facts and circumstances.

Step-1 : Identify the Asset Pool

As this stage, it is common for lawyers to seek that the parties each provide ‘full and frank disclosure’ of their financial position in order that the asset pool can be fully identified and so that the value of property can be agreed. Property includes assets such as real estate, shares, bank accounts, furniture, cars, boats, superannuation etc.

It is best to have a fully identified and agreed asset pool prior to discussing what percentage each person will receive. You need to agree on what exactly is being divided!

Step-2 : The Contributions of the Parties

Once Step 1 has been completed, we move to Step 2 and we must consider what each person has contributed to the relationship. Contributions can be financial, for example, one person may have been the primary income earner for the family. However, we also must assess non-financial contributions, such as caring for children, being the primary homemaker, making improvements to the property etc. It is not uncommon that one person’s financial contributions outweighs the other. However, it may have been difficult for the primary income earner to maintain a steady income had it not been for the non-financial contributions of the other person. Therefore, financial and non-financial contributions are often given equal weight.

Contributions may be easy to assess in a short relationship where it can be clearly identified as to what each person brought into the relationship. However, in long relationships, it is quite common for the lines to blur and it can be a fruitless exercise to attempt to fully identify contributions over a 20+ year period.

Step-3 : Future Needs – also know as Section 75(2) Factors

By the time we reach this step, the asset pool has been identified and agreed, the contributions have been assessed, and now we consider the future needs of each person.

Future needs takes into account factors as outlined in Section 75(2) of the Family Law Act. These factors include the age of the parties, health, care arrangements for the children, the prospects of gainful employment into the future etc.

For example, if one person is to remain the primary carer for two children under 10, then their future needs are likely to outweigh the other person and an adjustment ought to be made to reflect that reality. It may be that one person has significant health issues, or that one person was unable to improve their employment prospects due to taking time away from work to be the primary homemaker. These factors must be taken into account.

Step-4 : Just and Equitable – What is Fair?

So, we have now identified and agreed to the asset pool, we have assessed contributions (both financial and non-financial) and we have considered the future needs of each person. We must now look at the situation and assess what a just and equitable division of assets looks like in this particular case. It may be that further adjustments need to be made in order for a division to reflect a fair percentage in the circumstances. As mentioned earlier, this process takes into account the above 3 Steps. There is not a clear formula and each matter will likely have a different set of facts and circumstances.

For example, in a 30 year marriage, where the contributions have been equal, both parties are healthy and have equal future needs, a percentage split of 50/50 may be appropriate. In a situation where the parties have been in a de facto relationship for 3 years, both are employed full time and neither have any children, it may be that each party will ‘take out what they brought in’ – and so, if one party brought in 70 percent, then the final split may be 70/30.

There are of course many other factors that may need to be considered, such as whether one party received an inheritance. There may be situations where assets may be ‘quarantined’ (and not just during COVID-19) – which means, that it may be put outside the asset pool and not part of the division. It could also be that an item does not actually meet the definition of ‘property’ and therefore, it ought not be included in the asset pool.

It is vital to obtain accurate legal advice at an early stage. Sometimes the advice may not be exactly what you would like to hear, for example, being informed that you need to disclose your last three tax returns can be frustrating, but accurate advice is worth far more than having a lawyer agree with everything you say just to ensure you engage their service.

Don’t hesitate to contact Nardi Lawyers on 0491 626 283 for a free initial consultation for all things family law. You can also start a matter for free through our website and you will receive a complementary welcome kit!

Michael Nardi

Principal and Director of Nardi Lawyers


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